OneLBriefs

Canadian Industrial Alcohol v. Dunbar Molasses

Facts:

P entered into a contract with D where D would supply 1.5M gallons of molasses to P over a time span.

D only made delivery of 344k gallons and claims that it did not ship the full order because its supplier cut its output.

P sued D for nonperformance.

Procedural History:

Lower court found for P.

NY COA affirmed, found for P, contract enforceable.

Issues:

Does the continuance of certain circumstances, which was an implied presupposition in the minds of the contracting parties, condition their contract?

Holding/Rule:

Where a seller brings contractual liability upon himself to deliver a specified amount of goods on a specified date, he is bound to make good on that promise notwithstanding any impossibility brought about by the seller's supplier reducing production, because the seller could have provided against that contingency.

Reasoning:

The contract does not keep the D's duty to perform so narrow as to allow them to escape merely because a circumstance they were expecting changed.

If the refinery had been destroyed, or if the sugar crop failed, or if there was a war, then the contract could be rescinded.

If all contracts could be rescinded for the reason that a circumstance a party was expecting changed, then business could not be transacted with the security or smoothness.

The D could have entered into a contract with the refinery.

The P was not informed that the output of the refinery was a condition of the contract.